Analysis by an industry leader has examined how the type of borrower affects the likelihood of a mortgage default

ING Direct and Bank of Queensland (BOQ) lead the way in lowering interest rates following yesterday’s Reserve Bank decision to cut the official cash rate.

ING has lowered the interest rate on its variable mortgages by 0.25%, effective Monday, December 24, while BOQ has lowered its rate by 20 basis points.

ING CFO Glenn Baker says the company’s funding position has eased recently, allowing them to pass on 25 basis points.

“However, the threat of elevated funding costs has not passed completely.”

Baker says the RBA cash rate was one element that ING considered, but says their own funding position was the driver of the decision.

BOQ CEO Stuart Grimshaw says the bank was pleased to pass on a 20 basis points reduction to customers.

“This decision has provided a level of continuity and certainty for our customers and I believe they have appreciated it.”

Grimshaw says BOQ is conscious of the pressures facing all customers at this time of year, including those with home loans and those with deposits, and believes the 20 bps cut will strike a fair balance between the two.